More share misery for UK retailers
UK retail giants endured another torrid day on the stock market today amid concerns over the festive trading performance of some of the high street’s biggest names.
Sainsbury’s and Marks & Spencer were the latest to come under the spotlight after profits warnings last week from Currys and PC World owner DSG International and sofa retailer Land of Leather.
Speculation that the UK’s third largest supermarket had missed internal profits and sales targets over Christmas saw it fall 4% – after tumbling as much as 8% earlier. High street stalwart M&S also slipped 4% on fears that the chain suffered its worst Christmas for two years.
The worst-hit retailer in the FTSE 100 Index was B&Q owner Kingfisher – down 5% - while fashion chain Next made further losses of more than 4% following on from downbeat comments on high street prospects last week.
Other clothing chains alongside Next such as French Connection and Alexon were on the ropes, with share price falls of 10% and 10.5% respectively. DSG meanwhile lost another 8%.
General retailers among the Footsie’s top 350 firms lost 3.5% during the session, while food retailers were almost as hard-hit with a 2.5% fall.
The weak sentiment over Sainsbury’s – which updates the market on Thursday - put Morrisons and Tesco under pressure as both supermarkets recorded falls of more than 2%.
While analysts are expecting like-for-like sales growth of 3.6% excluding petrol from Sainsbury’s, the rise is thought to lag behind those of its rivals, with the supermarket forced into heavy discounting of unsold produce after heavy competition .
Meanwhile reports claimed M&S could reveal a 2% fall in like-for-like sales when it reports on Wednesday – marking its first dip in sales growth for nine quarters.
Philip Dorgan, an analyst at Panmure Gordon, said he believed the group would unveil its “worst sales performance for some time”.
The fears weighed on department store chain Debenhams – down 6% – while other retailers on the back foot included H Samuel jeweller Signet, which fell more than 2%.
Retailers have called for more interest rate cuts from the Bank of England to follow December’s move lower to ease pressure on hard-pressed shoppers facing more expensive mortgage payments.
In a difficult start to the festive update season, DSG – recently relegated from the Footsie – warned that profits would be up to £50 million lower than expected after “disappointing” trading.
Land of Leather shares lost nearly half their value on Friday after management warned annual profits may come in “significantly below” last year.
